In a rich country A, the gross domestic product 1 per person is r = 53,000 (US dollars). Ina poor country B, the GDP per person is p = 7,000. Suppose that the GDP of country Agrows by 5% per year, and that an economic miracle in country B begins to propel agrowth of 9% per year. Assume these growth rates are constant.1) Over how many years does the absolute difference in GDP between richcountry A and poor country B increase?2)How many years does it take for the GDP of country B to exceed that ofcountry A? (Justify your answers.)

GDP refers to the value of final services and goods that are produced in an economy at a particular…

Answered: In a rich country A, the gross domestic…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 5P

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